Laura Ashley accused of bullying over price-cut demand to suppliers

Laura Ashley has been accused of “bullying” suppliers after it emerged that
the retailer has demanded they pay back 10pc of the value of orders it had already
agreed with them.

The letter, signed by Laura Ashley’s chief financial officer Seán Anglim and chief operating officer Nick Kaloyirou, claims that prices are being driven down by the “advent of online-only retailers and marketplaces”.Photo: CAMERA PRESS

In a letter seen by The Sunday Telegraph, the home furnishings company sought an “immediate cost price reduction of 10pc” including on “orders already placed”.

The company blamed the “increasingly competitive” UK retail environment. It also said that if suppliers met its demands it would mean the company would not have to resort to “reviewing our supplier database”.

The Forum of Private Business said the letter was “one of the worst cases of supplier abuse we’ve ever seen”.

The letter, signed by Laura Ashley’s chief financial officer Seán Anglim and chief operating officer Nick Kaloyirou, claims that prices are being driven down by the “advent of online-only retailers and marketplaces”.

It reads: “With this in mind, we are requesting an immediate cost price reduction of 10pc. We feel this is both fair and equitable and will save us a process of reviewing our supplier database.”

The request, sent to all Laura Ashley suppliers a fortnight ago, applies to new orders as well as those already placed. The retailer has more than 200 stores around the UK and had sales of almost £286m in the year to January 2012, producing a pre-tax profit of £18.4m. It is due to announce its latest full-year results on Thursday.

A spokesman for Laura Ashley said: “We have very strong and long-term relationships with our suppliers and always have done.

“We work closely with them to deliver the right products at the right prices for our customers and are having ongoing positive conversations with all our suppliers to ensure we keep doing this.”

A supplier to the retailer said: “This is an outrageous, bullying and arrogant letter.

“It’s 10pc or else. It means we end up losing money on work we’d already negotiated prices for – and agreed with our own suppliers. How is that fair and equitable? That’s our profit gone. We can’t honour this.” The supplier, who asked to remain anonymous, added: “I think suppliers should play hard ball on this and not roll over.”

The Laura Ashley letter follows a similar demand by John Lewis.

Last month, the department store chain told suppliers they are to be subject to a rebate of up to 5.25pc on annual sales with the retailer because it needs “all parties to participate in showing their ongoing commitment and support”.

Debenhams has also been accused of putting the squeeze on its supply chain after it told companies it works with that it intends to cut prices by 2pc and delay payments from 90 days to 120 days.